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“Consequences” Of IDFC-Shriram Group Merger; Fall in Shares

Shares of IDFC and Shriram Group of companies fell by up to 7.4 per cent today, 7th July 2017, after they agreed to merge and create the largest retail-focused bank in the country.

IDFC’s scrip went down by 4.67 per cent to Rs57.10 on BSE. IDFC Bank also fell by 3.32 per cent to Rs62.60, but later recovered the losses and was trading 0.31 per cent higher at Rs64.95. Shares of Shriram Transport Finance tanked 7.39 per cent to Rs1,010 and Shriram City Union Finance tumbled 5.52 per cent to Rs2,350.

IDFC, which entered into banking late 2015, and the Piramal Group-backed financial services major Shriram Group on Saturday agreed to merge. The boards of Shriram Group and IDFC have entered into an exclusivity arrangement for 90 days to jointly explore an opportunity for a merger. No transaction has been approved by the boards.

Currently, Shriram Group has a loan book of over Rs80,000 crore, while IDFC and its banking arm together have loan book of over Rs60,000 crore. The total assets of the merged entity will cross Rs9 trillion. IDFC owns 52.86 per cent in IDFC Bank, which is the seventh-largest private lender in the country now. Piramal owns 20 per cent in Shriram Capital and 10 per cent each in both Shriram Transport and Shriram City Union.